Gold slides 4.6% this week as hot US inflation lifts December rate-hike odds
Gold and silver just handed buyers their sharpest discount in weeks. MCX gold futures fell about 4.6% over the week and silver nearly 5%, even after both metals edged higher on Friday, as a hotter-than-expected US inflation reading hardened expectations of another Federal Reserve rate hike in December.
On Friday, December gold futures closed up ₹525, or 0.39%, at ₹1,36,750 per 10 grams, while silver gained ₹234, or 0.13%, to ₹1,76,543 per kg. The recovery followed gold's steepest session of the week on Thursday, when prices dropped nearly 3% to a year-to-date low, with bargain buying trimming the losses a day later.
The trigger was US inflation. The producer price index rose 6.5% year-on-year, and consumer prices climbed 0.4% in October, pushing market expectations of a December Fed hike to nearly 90%, said Rajeev Sharan, head of research at Brickwork Ratings. Global spot gold slipped from above $4,100 to around $3,880 an ounce, well below the third-quarter average of $4,262, as a stronger dollar and rising bond yields weighed on the non-yielding metal.
Ponmudi R, chief executive of Enrich Money, said MCX gold broke below the ₹1,37,500–₹1,38,300 support zone, which has now turned into resistance, with the next barrier at ₹1,40,000–₹1,41,000. Immediate support sits at ₹1,35,066–₹1,34,000, and a break below could drag prices towards ₹1,32,000–₹1,31,000. The weekly chart formed a bearish engulfing candle, he said, while a weaker rupee, with USD/INR up about 0.4% on the week, cushioned domestic prices against the sharper international fall.
Silver is trading below the ₹1,80,000 mark on MCX and $50 an ounce internationally, with resistance at ₹1,78,000–₹1,80,000 and support at ₹1,72,000–₹1,70,000. Ponmudi advised traders to stay cautious on long positions and consider options hedging. Sharan expects gold to trade between $3,850 and $4,000 an ounce near term, with Indian wedding demand and steady central bank purchases limiting the downside. The coming week brings the Federal Reserve meeting minutes and Nvidia's earnings; for gold, a sustained move above $4,000 and then $4,150 would be needed to signal a meaningful recovery.
What it means for Pakistan: Pakistan has no formal gold-price link to MCX, but local bullion and jewellery markets track international spot rates and the rupee, so a weaker dollar price can soften landed costs for buyers here even as the rupee's own slide offsets part of the gain. Any renewed Fed tightening that strengthens the dollar would raise the rupee cost of imports, while the same rate uncertainty that is pulling gold down also tends to weigh on risk assets, including the crypto holdings Pakistani investors hold through offshore platforms.
